USD/CAD break below 1.2850 and extends correction

• CAD modestly stronger amid higher crude oil prices..
• USD weakens during US session as US yields retreat

A strong Canadian dollar and a modest retreat of the greenback pushed USD/CAD to fresh daily lows. The pair dropped to 1.2829 and it was hovering around 1.2845 down 35 pips from Friday’s close.

The modest decline was driven by a weaker US Dollar across the board particularly against commodity and Emerging Market currencies. Another factor supporting the downside was crude oil. The WTI rose to $72.00 a barrel.

Regarding NAFTA negotiations, White House Economic Adviser Larry Kudlow mentioned in an interview with CNBC that it is in US interest to reach a good deal on NAFTA and also said that many of items were negotiated.

The decline in US yields contributed to the slide in USD/CAD. The 10-year pulled back to 3.06% from last week high of 3.13%.

USD/CAD significant levels

On Monday, USD/CAD is retreating following a 80-pip rally on Friday and after being rejected again from above 1.2900.

The short-term support levels might be located at 1.2830 (4-hour 20-SMA), 1.2795  and 1.2775. On the upside, immediate resistance is seen at 1.2870, followed by 1.2890 and 1.2910 (May 18 high).